Annual Report on Boulder Real Estate [House Einstein]
2. Market Research: Boulder
an analysis of real estate market conditions in
Boulder, Colorado
January, 2014
Sponsored by:
3. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
Legal
This presentation was prepared exclusively for the benefit and use of the Realty Unique clients to assist
their study of real estate market conditions. This presentation is for discussion purposes only and is
incomplete without an in-person, oral presentation by Realty Unique. This presentation reflects opinions of
prevailing market conditions on this date, which are subject to change. Realty Unique recommends
careful and complete due diligence before buying or selling real estate or other investments. The following
presentation is not to be construed as legal, tax, or investment advice. Realty Unique will not be held
liable for investment decisions derived from this presentation. Previous market performance is not a
guarantee of future results and there is financial risk associated with buying or selling property. Consult
with your financial, legal, and real estate advisers before making an investment decision. The data in this
presentation was obtained by private and public sources, without independent verification.
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4. “You can’t make a smart
real estate decision without
knowing the facts about
market conditions.”
- Osman Parvez, Founder
Realty Unique, LLC
5. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
About
Osman Parvez: Osman’s professional experience includes investment analysis, economic consulting, real
estate development and investment banking. Prior to Realty Unique, he served as an Equities Research
Associate for Kaufman Brothers, Research Director for Windwalker Real Estate, Associate Director for Capital
Markets at Republic Financial and co-founder of Silver Fern Homes. Outside of real estate and investing, he
loves being in the wilderness and has research experience studying the impacts of climate change. Osman
holds an MBA in finance, a B.S. in biology and is a Certified Negotiation Expert (CNE).
Email: osman@realtyunique.com ph: 303.746.6896
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6. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
A Note About The Data
The following slides represent
data from various sources, as
cited. Understanding the
limitations of each data source is
important.
Data from the Boulder Area
Realtor Association (BARA) is
based on the IRES MLS. This
MLS contains the majority of real
estate sales in Boulder, Longmont,
and Louisville but not in others,
where Metrolist has a large market
share.
The resulting potential error is
unacceptably large in areas like
Broomfield and Erie (see chart).
If you see other analyses on area
real estate conditions, confirm the
data source.
Please see An Open Letter to
BARA.
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7. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
Market Conditions
Regional Overview
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8. Regional Summary
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
•
Inventory remains at record low levels throughout the region. Longmont, Boulder, and Boulder
Attached Dwellings (AD) are experiencing about the same level of shortage.
Months of Inventory, a metric based on sales volume relative to inventory, shows unbelievably low
levels of inventory in Louisville and Superior. Experts believe about six months of inventory is
normal in a healthy market.
The new regional summary excludes Erie, Mountains, and Plains due to incomplete data from BARA.
December
YoY
% Chg
MoM
% Change
Absorption
(Sold/Inv**)
December
YoY
% Chg
MoM
% Change
Boulder
Boulder AD
Lafayette
Longmont
Louisville
Superior
123
125
54
173
20
15
(25.5)%
(23.8)%
8.0 %
(24.1)%
(4.8)%
(16.7)%
(26.3)%
(17.8)%
(14.3)%
(21.7)%
(37.5)%
(21.1)%
Boulder
Boulder AD
Lafayette
Longmont
Louisville
Superior
28.1%
26.3%
22.2%
28.1%
46.9%
47.4%
16.9 %
19.6 %
(28.7)%
32.3 %
9.4 %
82.7 %
34.9 %
27.6 %
(23.8)%
(10.0)%
31.3 %
31.6 %
Sold Volume
December
YoY
% Chg
MoM
% Change
Prev. Month
3 Mo. Avg
Boulder
Boulder AD
Lafayette
Longmont
Louisville
Superior
47
40
14
62
15
9
(9.6)%
(9.1)%
(26.3)%
10.7 %
(16.7)%
28.6 %
20.5 %
21.2 %
(33.3)%
(27.9)%
0.0 %
0.0 %
4.3
4.6
3.0
2.6
2.1
2.1
3.1
3.9
3.0
2.8
1.9
2.0
Inventory
Months of Inventory (Implied)
Based On ->
December
Boulder
Boulder AD
Lafayette
Longmont
Louisville
Superior
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2.6
3.1
3.9
2.8
1.3
1.7
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9. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
City of Boulder
Single Family Houses
(detached dwellings)
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10. Inventory
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
There was a normal long term
seasonal pattern for inventory
during 2013, despite the
ongoing shortage.
•
Inventory peaked in June
with 311 houses on the
market and bottomed in
December with just 123
homes available.
•
New listings are “like
throwing meat to wolves”
according to Chris Sweeney,
the Managing Broker of Pedal
to Properties.
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11. Sales Volume
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Sales volume also followed a
normal seasonal pattern
during 2013.
•
On average, peak sales
volume occurs in June but
was pushed to July this year.
•
Note the small spike in sales
volume during October, likely
the result of delayed closings
caused by the historic flood.
•
47 houses closed during
December, precisely the long
term average for the month.
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12. Sales Volume
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
In a small market like Boulder,
it’s important to look at data from
longer periods of time than a
single month to establish a trend.
•
The accompanying chart shows
cumulative sales volume over the
past six and twelve months,
ending in December.
•
According to BARA (chart),
volume increased 4.3% during
the twelve month period, year
over year. Combining data from
both MLS systems shows a
12.2% increase in annual
volume.
•
A much larger spike occurred in
2012, with 25.9% increase in
annual sales volume from the
prior year.
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13. Absorption
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Absorption remained highly
elevated during the full twelve
months of 2013, with a
noticeable lack of volatility from
March through August.
•
For sellers with less than perfect
properties, high absorption is a
good thing. It will lead buyers to
even consider homes with
deferred maintenance and in
poor locations.
•
For buyers, high absorption
means intense competition for
the most desirable homes. The
best approach is to work with an
experienced Buyer’s Agent who
will help you understand the
market and move aggressively
when the right property becomes
available.
Note: Absorption is the percentage of inventory sold in a given period of time.
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14. Days to Offer
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
This chart shows average days to
offer for deals that closed during
the month.
•
Note that sales which close
during January and February are
often properties that have been
on the market for a long time,
driving the average DTO higher.
•
The summer months are, on
average, the period with the
lowest DTO. While selection is
also highest during summer,
competition between buyers is
more intense.
•
DTO during 2013 (red line)
remained well below average
even during the shoulder
seasons. Buyers and sellers
should plan accordingly.
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15. Price Range Analysis
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
This chart shows the change in
sales volume by price range,
2013 vs 2012.
•
Sales volume fell dramatically for
entry level homes (priced below
$400,00).
•
The mid range experienced low
to moderate increases in sales
volume.
•
The $1.0MM to $2.0MM segment
saw only a mild increase.
•
The most dramatic change
occurred for homes valued at
$2.0MM or more, with a 333%
increase in sales volume.
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16. HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
City of Boulder
Town Homes and Condos
(attached dwellings)
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17. Sales Volume
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Sales followed a fairly typical
pattern during 2013 (red
line) compared to the long
term average (shaded area).
•
An unusual dip in sales
volume occurred in June,
followed by a slightly
elevated July, August, and
September.
•
40 condos and town homes
closed during December, up
21% from the preceding
month but a decrease of 9%
from last December.
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18. Sales Volume
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Sales volume reached 715
units during 2013 (on the
IRES MLS), the highest level
since 2007. This represents
a 12.6% increase from 2012.
•
If both MLS systems are
considered, sales volume
reached 804 units – an
increase of 31.6%.
•
Increasing sales volume
during a period of record low
inventory is a very strong
market signal for an upward
movement in prices.
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19. Inventory
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Inventory peaked early
during 2013, reaching a high
of 250 units.
•
Last year’s peak was less
than half of the average
peak inventory.
•
Just 125 units were on the
market in December, 24%
below last year and a new
record low.
•
Inventory will rise through
the spring, but it remains
shocking below the long
term average.
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20. Absorption
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Absorption was well above
the long term average
throughout 2013, reaching a
peak of 42% in August.
•
Absorption ranged from 1.9x
to 2.6x the long term
average during 2013.
There is no shortage of
demand for attached
dwellings in Boulder.
•
Demand was not equal for
all property types and price
ranges. See slide 22 for
sales volume by price range.
Note: Absorption is the percentage of inventory sold in a given period of time.
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21. Days to Offer
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Deals that closed during
December were on the market
for an average of 70 days before
receiving an acceptable offer.
This is 34% below the long term
average for the month.
•
As the chart shows, days to offer
was well below average
throughout the year, reaching a
bottom in September.
•
Keep in mind this the average.
Marketed well, the most
desirable properties were under
contract within a few days of
hitting the MLS during 2013.
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22. Price Range Analysis
This chart shows annual change
in sold volume by price range.
•
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Keep in mind that nearly 80% of
the market is priced below
$300,000. There is far greater
depth of market at the lower end
but this analysis suggests the
change in demand was greatest
at the higher end.
•
Record high absorption would
have likely driven sales volume
much higher across the market if
additional inventory had become
available. In other words, the
reason that the volume of sales
fell below $100,000 was due to
the inventory shortage– not a
lack of buyer interest.
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23. Lessons from the Trenches
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
In many ways, last year’s market
was a dream for sellers.
Professionally marketed properties
sold well and even marginal real
estate attracted buyer interest.
•
In some cases, sellers left money on
the table by not allowing adequate
time for the full pool of potential
bidders to view the property.
•
Buyers Agents were forced to be
vigilant and responsive to new
listings. With little leverage on
price, smart buyers negotiated on
inspection and appraisal
contingencies in order to win bidding
wars.
•
In this market, it’s important to
discuss and agree on negotiation
tactics well in advance of writing (or
receiving) offers. This cannot be
over-emphasized. Talk to your
agent for details.
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24. Read Up! Recent Articles From Our Blog
The Top 10 House Sales in Boulder
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
Don’t Blow the Negotiation [Strategy]
Contractors, Competence, and the
One Strike Out Policy
Fresh Boulder Listings, Get ‘Em Hot
Image: mkhmarketing
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25. Get A Great Deal
HOUSE EINSTEIN MARKET RESEARCH : JANUARY 2014
•
Buying and selling real estate is one of life’s largest
financial decisions. It’s not just an important
investment, it’s where your family and friends will
gather for many years and memories will be made.
Make a smarter decision, get a professional advisor.
•
At Realty Unique, we love to negotiate. Give us a
call. We can advise you on current market
conditions, help you find your dream home, or get
the most value from the sale of your property.
•
We work with buyers and sellers – long time
residents and those relocating to Boulder.
Image Johnny Goldstein
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